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HomeMy WebLinkAbout021306 ORD - 12/17/1991AN ORDINANCE AMENDING THE CODE OF ORDINANCES, CHAPTER 35, OIL AND GAS WELLS, BY AMENDING SECTIONS 35-3, 35-16, 35-34, 35-35, 35- 60, 35-80, 35-105, 35-107, 35-130, AND 35-133. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. That the Code of Ordinances, Chapter 35, Sections 35-3, 35-16, 35-34, 35-35, 35-60, 35-80, 35-105, 35-107, 35- 130, and 35-133 are hereby amended by deleting them in their entirety and substituting the following therefor: Sec. 35-3. Administrative enforcement and supervision. Administrative enforcement of the terms of this Chapter shall be by the oil and gas well division of the city. It shall be the duty of the superintendent to enforce the provisions of this chapter and to that end he is hereby vested with police authority. Sec. 35-16. "City petroleum superintendent." The term "city petroleum superintendent" or "superintendent" means the head of the oil and gas well division of the city. Sec. 35-34. Oil and Gas Well Division; established. There is hereby continued, the oil and gas well division, to exist until abolished by the council. Sec. 35-35. Department head -Appointment; qualifications; disclosure of interest. The head of the oil and gas well division shall be the petroleum superintendent appointed by the city manager. The city petroleum superintendent (also referred to herein as superintendent), shall be a technically qualified person with respect to the type of oil and gas activity prevalent in the area covered by this chapter. Before appointment, any person being considered for the post of superintendent shall make a full disclosure to the city manager and the council of any employment, stock ownership or other pecuniary or business relationship with any lessee, and during his term of office the superintendent shall make the same disclosure as to any changes in such matters. Sec. 35-60. Drilling blocks. In order that the purpose and intent of this chapter, as stated in Article I, shall be carried out and future drilling for oil and gas within the city may proceed in an orderly manner, and for convenience AG5000.003.kp 1 hUCRO MED 021306 and clarity in identifying the location of approved or proposed drilling locations, the land area of the city to which this article applies (with the exceptions noted in section 35-62) has been divided into drilling blocks, each containing approximately forty (40) acres. Each block is shown and identified on a map marked Exhibit A, and on file in the oil and gas well division office. The exact description of any such drilling block not already approved by ordinance prior to the adoption of this chapter shall be determined in the manner provided in section 35-61 hereof. All mineral interests in each drilling block shall be unitized as herein provided with the exceptions noted in section 35-62. No application to drill on any drilling block where all or part is required to be unitized will be approved unless the applicant shows that he owns or controls by voluntary agreement more than fifty (50) percent of the total operating rights in the drilling block, or that portion of the block left after deducting exempt acreage, to be unitized. No more than one completion shall be made in any reservoir on any drilling block until special field rules have been adopted by the railroad commission for the reservoir. The final well density within each drilling block will be no greater than that prescribed by the railroad commission in special field rules which may be adopted for the field. The city council may, from time to time, amend the boundaries of the drilling blocks referred to in this section, after a recommendation to that effect from the oil and gas well division. Prior to a recommendation for amendment of the drilling block boundaries, the oil and gas well division shall cause to be published on the same day for two (2) consecutive weeks a notice of the drilling blocks proposed to be changed. The applicant seeking the change in the drilling block boundaries shall pay for notification in the official city newspaper. The proposed changes shall also be kept on record in the office of the oil and gas well division for a period of seven (7) days after the second notice hereinabove referred to. If no objections have been received, or if after examination of any objections received, the petroleum superintendent or his representative recommends a change in the drilling block or blocks, then the recommendation of the petroleum superintendent shall be forwarded to the office of the city manager for further action. If objections are received, then the city secretary shall arrange for a public hearing on the question of alteration of the drilling block boundaries before the city council. Section 35-80. Insurance and Bonds. (a) The holder of any well permit issued hereunder shall obtain and maintain in force insurance required as determined in accordance with the provisions of ordinance no. 19277, as amended. (b) The holder of any permit to drill and/or operate a well issued hereunder shall be responsible for all environmental pollution AG5000.003.kp 2 caused by its well(s). The permittee's responsibility shall include, but not be limited to, paying for or doing all clean up and remediation of environmental pollution, paying all fines and penalties levied by any governmental agency, and any other actions required by governmental agencies. (c) The holder of any permit to drill and/or operate a well issued hereunder shall post a corporate surety bond, executed by the permittee as principal and by a corporate surety acceptable to the city, as obligee, and conditioned that the principal named in the bond shall faithfully comply with all of the provisions of this chapter and of the permit until the permit shall have been released by the principal and the release shall have been approved by the city as provided herein. Such bond shall secure the city against all costs, charges and expenses incurred by it by reason of the failure of the principal to fully comply with the provisions of the permit and of this chapter. The bond for any well permit with a surface location in a bay area that is accessible only via marine vessel shall be fifty thousand dollars ($50,000.00) per permit, the bond for any number of well permits with surface locations on land and accessible by a land vehicle shall be twenty thousand dollars ($20,000.00), and the bond for any well permit with a surface location in the Gulf of Mexico shall be two hundred thousand dollars ($200,000.00). No permit holder shall be required to post more than a two hundred thousand dollar ($200,000.00) bond for any number of well permits required by this chapter. A bond issued under this provision must be valid for six (6) months or more and require as sole documentation for payment a statement in writing from the petroleum superintendent setting forth the circumstances giving rise to the call on the bond, or a statement of the failure to furnish proof of renewal or replacement of the bond, no less than thirty (30) days prior to the expiry of the then current bond. Such bond must be renewed upon expiration and proof of such renewal must be received by the city's petroleum superintendent or successor official "petroleum superintendent" at least thirty (30) days prior to expiration. If no renewal is received, or cash in lieu thereof, the city may, after ten (10) days prior written notice mailed to the permittee at the address listed on the permit, call the bond for failure to timely renew. If the bond is called for failure to timely renew, the money will be held in an account as if cash had been posted in lieu of a bond. The city shall not be liable for any interest on any bond so called. (d) In lieu of the above described bond, a permittee may be allowed to submit an irrevocable letter of credit naming the city as beneficiary, in face value equal to that of the bond as described above. An irrevocable letter of credit under this provision must be issued by a financial institution with offices located within the State of Texas, be valid for six (6) months or more, and require as sole documentation for payment a statement in writing from the petroleum superintendent setting forth the circumstances giving rise to the draft and accompanied by a properly drawn draft in an amount not to exceed the face value of the letter of credit, or a statement AG5000.003.kp 3 of the failure to furnish proof of renewal or replacement of the letter of credit, no less than thirty (30) days prior to expiry of the then current letter of credit. Such letter of credit must be renewed upon expiration and proof of such renewal must be received by the petroleum superintendent at least thirty (30) days prior to expiration. If no renewal is received, or cash in lieu thereof, the city may, after ten (10) days prior written notice mailed to the permittee at the address listed on the permit, call the letter of credit for failure to timely renew. If the letter of credit is called for failure to timely renew, the money will be held in an account as if cash had been posted in lieu of a letter of credit. The city shall not be liable for interest on any letter of credit so called. (e) In lieu of the above-described bond, a permittee may be allowed to submit a certificate of deposit, in face value equal to that of the bond as described above. A certificate of deposit under this provision must be made out jointly to the customer and the city, endorsed by the customer and physically held by the city, issued by a financial institution with offices located within the State of Texas, be valid for six (6) months or more, and require as sole documentation for payment a statement in writing from the petroleum superintendent setting forth the circumstances giving rise to the draft, or a statement of the failure to furnish proof of renewal or replacement of the certificate of deposit, no less than thirty (30) days prior to expiry of the then current certificate of deposit. Such certificate of deposit must be renewed on expiration and proof of such renewal must be received by the petroleum superintendent at least thirty (30) days prior to expiration. If no renewal is received or cash in lieu thereof, the city may, after ten (10) days prior written notice mailed to the permittee at the address on the permit, call the certificate of deposit for failure to timely renew. If the certificate of deposit is called for failure to timely renew, the money will be held in an account as if cash had been posted in lieu of a certificate of deposit. The city shall not be liable for interest on any certificate of deposit so called. (f) In lieu of bond and insurance for permits, a permittee may be allowed to post an indemnity agreement, in a form acceptable to city, with the city conditioned in the same manner as bond and insurance required hereunder if such permittee files a balance sheet and financial statement certified by a recognized firm of certified public accountants reflecting the net worth of permittee to be in excess of twenty million dollars ($20,000,000.00). (g) The city manager reserves the right to adjust the limits and types of coverages required and will provide sixty (60) days notice of intent to change coverages or limits to the permit holders. Permittee agrees to adjust its insurance policy(ies) as directed at its next renewal date or within one (1) year from notice of the adjustment whichever occurs sooner. AG5000.003. kp 4 Sec. 35-105. Gas well testing and flaring. The oil and gas well division must be notified a minimum of one hour prior to the commencement of any gas well back pressure test program wherein gas is released to the atmosphere either in a natural state or by flaring. The oil and gas well division and fire department shall have the authority to specify the hours during which testing or flaring may be performed and impose any restrictions deemed necessary to protect the public health, welfare and environment during testing or flaring. Sec. 35-107. Subsurface safety valves. All wells with surface locations on state tracts and all wells with a surface shut-in pressure in excess of three thousand (3,000) psi shall be equipped with a subsurface safety valve. On wells with surface locations in the Gulf of Mexico, this valve shall be inspected or tested every two (2) years and a report of same filed with the oil and gas well division office. On all other wells, this valve shall be pulled and inspected annually and written confirmation of the inspection shall be filed with the oil and gas well division office. In the event that the Railroad Commission of Texas waives the requirement for a subsurface safety valve in a well on state owned tracts, then, upon written request for waiver from the operator for the same well, the petroleum superintendent shall evaluate the flow and pressure in that well and using appropriate engineering guidelines to prevent pollution, he may waive the requirement for a subsurface safety valve. Sec. 35-130. Wells to be abandoned. All wells within the city which are not producing oil or gas on a regular basis will, with the exceptions noted below, be plugged and abandoned. Exceptions: (a) Wells located on state tracts wherein the permittee holds a valid lease on minerals penetrated by such wells. (b) Wells in use as water supply wells. (c) Wells in use as salt water or waste disposal wells which are operating under a valid permit from the governmental agency having authority, including but not limited to the permit required in this chapter. (d) Wells used as injection or observation wells in secondary recovery, pressure maintenance or other improved recovery operations where such operations are conducted under a valid permit from the railroad commission. AG5000.003.kp 5 (g) Wells capable of producing oil or gas on a regular basis which are shut-in due to lack of market or because of transfer of allowable permitted by the railroad commission. Any well on which drilling, reworking, recompletion, or well servicing operations are in progress and continued with no cessation of more than ninety (90) consecutive days. Land wells where, within ninety (90) days of the effective date, or within ninety (90) days of the well's ceasing to produce oil or gas on a regular basis, the owner thereof files with the superintendent an application for exception which includes the following: (1) A surety bond in the amount of four thousand five hundred dollars ($4,500.00) with good and sufficient corporate surety payable to the city, providing that the principal will plug said well in accordance with the provisions of this chapter. In lieu of said bond, cash in the amount of four thousand five hundred dollars ($4,500.00) or a certificate of deposit endorsed to and held by the City in the amount of four thousand five hundred dollars ($4,500.00) may be deposited with the city on the same conditions; or, in the alternative, a letter of credit naming the city as beneficiary in the face value of four thousand five hundred dollars ($4,500.00), against which drafts may be drawn pursuant to the same conditions upon which the bond would be predicated, based upon a statement in writing by the petroleum superintendent setting forth the circumstances giving rise to the draft and accompanied by a properly drawn draft in an amount not to exceed the face value of the letter of credit or certificate of deposit. A bond, letter of credit, or certificate of deposit required herein shall meet all requirements set out in Section 35-80, except the amount which is set out herein. A bond conditioned as provided in section 35-80 shall also be filed unless such bond so conditioned is already on file and in effect. Operators that have indemnity agreements or two hundred thousand dollars ($200,000.00) bonds posted under section 35-80 are not required to post in lieu of plugging bonds. The plugging bond shall be released when the well is plugged and abandoned, or when the superintendent has been satisfied that the well is again producing oil or gas on a regular basis, or when it meets one of the conditions of exemption listed in paragraphs (d), (e) and (f) of this section. Acceptance, or continuation beyond an initial three- year period, of "in lieu of plugging" bonds shall be permitted only for those wells which have not been AG5000.003.kp 6 plugged and abandoned where the operator and principal on the bond still holds a valid lease on the minerals penetrated by such well. The operator, when posting a bond, or continuing a bond beyond the initial three- year period, shall provide the oil and gas well division with evidence that he does in fact own or control minerals penetrated by the well. In cases where the mineral lease has expired and wells have not been plugged, then the operator and the surety will be notified at least three (3) months prior to calling on the bond so that sufficient time will be permitted for the operator or surety to adequately plug and abandon the well or the city will in fact plug and abandon the well and charge the cost to the surety. Sec. 35-133. Cutting off casing. When a well with a surface location on a state tract is plugged, then the casing shall be cut off and removed from the depth prescribed by the corps of engineers. When a well with a surface location that is not on a state tract is plugged, then the casing shall be cut off a minimum of five (5) feet below the surface of the ground and a one- half -inch steel plate welded over the top. A two-inch collar shall then be welded to the plate. A two-inch galvanized pipe shall be screwed into this collar so as to extend upwards five (5) feet above the surface. The oil and gas well division will provide a certificate to be attached to the two-inch riser and it shall be unlawful to remove such riser unless a permit to remove same is approved by the oil and gas well division. SECTION 2. If for any reason any section, paragraph, subdivision, clause, phrase, word or provision of this ordinance shall be held invalid or unconstitutional by final judgment of a court of competent jurisdiction, it shall not affect any other section, paragraph, subdivision, clause, phrase, word or provision of this ordinance for it is the definite intent of this City Council that every section, paragraph, subdivision, clause, phrase, word or provision hereof be given full force and effect for its purpose. SECTION 3. Publication shall be made one time in the official publication of the City of Corpus Christi by publishing the caption stating in substance the purpose of the ordinance, this ordinance to become effective upon such publication. AG5000.003.kp 7 That the foregoing ordinance was read for the first time and passed to its second reading the day of , 19 , by the following vote: Mary Rhodes Edward A. Martin Cezar Galindo Joe McComb Leo Guerrero Dr. David McNichols Betty Jean Longoria Clif Moss Mary Pat Slavik That the foregoing ordinance was read for the second time and passed to its third reading on this the day of , 19 , by the following vote: Mary Rhodes Edward A. Martin Cezar Galindo Joe McComb Leo Guerrero Dr. David McNichols Betty Jean Longoria Clif Moss Mary Pat Slavik RPI NDeo : That the foregoing ordinance was read for the third time and passed finally on this the day of , 19 , by the following vote: Mary Rhodes Edward A. Martin Cezar Galindo Joe McComb Leo Guerrero Dr. David McNichols Betty Jean Longoria Clif Moss Mary Pat Slavik PASSED AND APPROVED, this the day of , 19 Al EST: City Secretary MAYOR THE CITY OF CORPUS CHRISTI APPROVED: 5 DAY OF 1>y(wfl Joe , 191/ : JAMES R. BRAY, JR., CITY ATTORNEY By 01 lacy. t11 0 Pau., to -i , Assistant City Attorney 044 That th(e foregoing o the 9. { day of inance1 was read for the first time and passed to its second reading c Lc/L.." , 1941 / , by the following vote: Mary Rhodes Cezar Galindo Leo Guerrero Betty Jean Longoria Edward A. Martin Joe McComb Dr. David McNichols Clif Moss Mary Pat Slavik That the foregoing ordinance was read for the second time and passed to its third reading on rn this the S day of / `e f t l l QA_ , 19 C? ! , by the following vote: Mary Rhodes Cezar Galindo Leo Guerrero Betty Jean Longoria � 1 . (LLL ittc Lt � _ Edward A. Martin Joe McComb Dr. David McNichols Clif Moss Mary Pat Slavik al That thRforegoing ordinance w„is read for the third time and passed finally on this the / / 1 day of 0( n‘ kar (. , 19 ! , by the following vote: Mary Rhodes Cezar Galindo Leo Guerrero Betty Jean Longoria al Edward A. Martin Joe McComb Dr. David McNichols Clif Moss Mary Pat Slavik PASSED AND APPROVED, this the % day of 4 X11 km ' , 19 q . MAYOR THE CITY OF CORPUS CHRISTI APPROVED: f t, DAY OF (0( , 19g1 : JAMES R. BRAY, JR., CITY ATTORNEY BY Ai Ctsy'o pOalp,/ , Assistant City Attorney 044 0 213 C d PUBLISHER'S AFFIDAVIT State of Texas, } CITY OF CORPUS CHRISTI County of Nueces } ss: Ad #71575 PO # Before me, the undersigned, a Notary Public, this day personally came Kerri Lesmeister, who being first duly sworn, according to law, says that she is a Business Office Secretary of the Corpus Christi Caller -Times, a daily newspaper published at Corpus Christi in said County and State, generally circulated in Aransas, Bee, Brooks, Cameron, Duval, Hidalgo, Jim Hogg, Jim Wells, Karnes, Kenedy, Kleberg, Live Oak, Nueces, Refugio, San Patricio, Victoria, and Webb Counties, and that the publication of NOTICE OF PASSAGE OF ORDINANCE NO. 021306 AMENDING THE CODE which the annexed is a true copy, was published in the Corpus Christi Caller -Times on the 23rd day of December 1991. One Time(s) $ 22.95 Fyc Ak utJ'vvi V' Business Office Secretary Subscribed and sworn to before me this 30th day of December , 1991 Notary Public, Nueces County, Texas My commission expires on 4-24-93 . COY Grub ...,..... QF PASSAGE SAGE OF 011pKi .021306 b AMENDING 'ODE OF OOILDIAND GAA WELLS, BHAPTER Y b AMENDING SECTIONS 35-3, 35-16, 35-34, 35-Z5, 35-60, 35-80, 3b:105, 35-107, 35-130, AND 35-133. The ordinance was paned and appfuved by the City, - Council of the City of Corpus Christi, Texas on the 17th day of December, 1991. /s/ Amino Chapa Coy GIN Secretary the CS.puraChrieti pu - NOTICE OF MAI on ram ih.